Climate Risks Threaten U.S. Housing Market as NOAA Ceases Key Weather Data Updates

The escalating impact of climate-induced natural disasters is poised to significantly disrupt the U.S. housing market, with projections indicating substantial financial losses for mortgage lenders and homeowners alike. Concurrently, the National Oceanic and Atmospheric Administration (NOAA) has announced it will cease updating its "Billion-Dollar Weather and Climate Disasters" database beyond 2024, raising concerns about the nation's ability to assess and respond to these escalating threats.

A recent study by climate risk assessment firm First Street projects that climate-related foreclosures could cost U.S. mortgage lenders approximately $1.2 billion in 2025, affecting around 19,000 properties. This figure is anticipated to escalate to $5.4 billion by 2035, with nearly 84,000 repossessions. The primary drivers of these losses include increased borrower defaults due to financial strain and declining property values, particularly in high-risk states like Florida, California, and Louisiana. These three states alone are expected to account for over half (53%) of the projected climate-related mortgage losses in 2025.

The study highlights that climate risks such as hurricanes, floods, and wildfires are driving up insurance premiums and causing insurers to withdraw coverage, especially in states like Florida and California. These factors increase borrower defaults due to financial strain and falling property values. The findings underscore the urgent need to accurately price climate risk in mortgage markets.

In a significant policy shift, NOAA has announced it will stop updating its "Billion-Dollar Weather and Climate Disasters" database beyond 2024. This database has been instrumental in tracking the economic impacts of extreme weather events since 1980. The decision aligns with staffing and policy changes under the Trump administration, including mass layoffs at NOAA and a reduction in public communication of climate impacts.

The cessation of updates to this critical database has raised concerns among scientists and policymakers. The lack of updated data may impede the ability to assess and respond effectively to disaster impacts. Low-income communities, often located in high-risk areas with inadequate infrastructure, may face increased hardships due to reduced data availability.

The frequency and severity of climate-related disasters have been on an upward trajectory. In 2024, the U.S. experienced 27 individual weather and climate disasters, each causing at least $1 billion in damages, totaling approximately $182.7 billion. This total places 2024 as the fourth-costliest on record, trailing 2017 ($395.9 billion), 2005 ($268.5 billion), and 2022 ($183.6 billion). Adding the 27 events of 2024 to the record that begins in 1980, the U.S. has sustained 403 weather and climate disasters for which the individual damage costs reached or exceeded $1 billion. The cumulative cost for these 403 events exceeds $2.915 trillion.

The intersection of increasing climate disasters and policy shifts has several ramifications. Mortgage lenders face heightened risks from climate-induced defaults and property devaluation. Rising claims and potential insurer withdrawals from high-risk areas could lead to higher premiums and reduced coverage availability. Vulnerable populations may encounter prolonged recovery periods and diminished access to necessary resources.

These developments underscore the urgent need for comprehensive strategies to address the financial and societal challenges posed by increasing climate-related disasters. Ensuring accurate data collection and supporting affected communities are essential steps toward building resilience in the face of a changing climate.